loop tool does not create a circle
You do have bad geometry.  To find and fix it it, I did the following in edit mode:
Go to face select mode and select most of the faces.

Then type h to hide those faces

This isn't strictly necessary but it makes it easier to follow the next bit.
Next I went into vertex select mode, and selected every vertex

and I typed m to bring up the merge menu

and I selected &quot;by distance&quot;

and in the lower bar it told me that it had removed vertices:

Next I tried to select the vertices that you want to make a circle using alt-LMB after deselecting all with ALT-A.  But that failed because you have some extra vertices that are not near enough to each other for 'by distance' to work with the default settings so I opened the merge tool information (at the bottom left of the 3d view)

I had to set the merge distance to 0.01 to get six additional vertices.
After that I reselected the ring, and Loop tool -&gt; circle worked fine.

follow that with ALT-h to unhide the hidden faces and that's that.